Nvidia Earnings On Deck: Can AI Darling Beat The Street's High Bar Amid China Headwinds?

All eyes will be on Nvidia Corp. NVDA this Wednesday after market close, with Wall Street intensely focused on whether the AI-chip giant can justify its rise amid rising geopolitical and regulatory headwinds, especially from President Donald Trump's recent China tariffs and restrictions.

For the fiscal quarter ending April 30, analysts expect earnings per share of $0.88, a 43% increase from the prior year, according to Benzinga Pro.

Revenue is projected at $43.4 billion, up 65% from a year ago—a staggering figure that reflects sustained demand for Nvidia's AI accelerators and data center products.

Yet not all is rosy under the surface. Bank of America analyst Vivek Arya sees potential cracks forming beneath the headline numbers.

Strong Top-Line Growth Expected, But EPS May Miss

"We look for modest Q1 beat vs. the $43 billion guide and $43.4 consensus," Arya said in a recent note.

Yet, the expert warned that Nvidia’s gross margins could fall sharply due to a $5.5 billion inventory write-off tied to U.S. government restrictions on high-end H20 chips sold to China.

That could drag gross margins from the guided 71% to just 58%, pushing pro forma EPS closer to $0.74, nearly 16% below consensus.

How Bad Could Q2 Guidance Get?

Aside from first-quarter figures, the real market-moving factor will likely be Nvidia's second-quarter outlook, where downside risk appears elevated.

Analyst consensus has already pulled Q2 revenue forecasts down to $46.4 billion from $48 billion before the H20 ban. But Arya said this may still be too optimistic.

Applying a similar 47% hit seen by competitor Advanced Micro Devices Inc. AMD from China’s chip restrictions, Arya believes Nvidia’s guidance could drop as low as $41 billion—a figure that would shock investors and imply a pro forma EPS of just $0.85.

Massive $15 Billion China Hit To FY26

The long-term impact of the H20 ban may be even more severe. Nvidia itself has disclosed that restrictions could reduce fiscal 2026 sales by $15 billion, far higher than the $3.8 billion consensus expectation and even Bank of America's prior $12 billion estimate.

If this scenario plays out, EPS could fall to $3.93 for FY26, 10% below the current consensus of $4.38 and 14% below pre-ban forecasts of $4.56.

Despite the looming risks, Bank of America maintains a “Buy” rating on Nvidia with a 12-month $160 price objective, suggesting a 22% upside from current levels.

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